Mr. Speaker, I am pleased to have this opportunity to participate in today's debate about the importance of passing Bill C-25 in good time.
I would like to use my time to take a closer look at this new retirement savings option for Canadian workers within the broader context of growing income inequality and, more importantly, what our government has done to fix that.
This troubling trend is affecting countries around the world, and Canada is no exception.
The global economy is more integrated than ever in terms of trade, the job market and even monetary systems, so it should come as no surprise that Canada is feeling the effects of this phenomenon that originated elsewhere. Other countries with advanced economies and social safety nets have experienced similar repercussions. For example, the growing gap between rich and poor in Germany is virtually identical to that in Canada in the most recent decade studied by the Organization for Economic Co-operation and Development, the OECD.
That being said, we must keep in mind that the effects of increased immigration and heightened global interaction and integration have been, for the most part, extremely positive.
In absolute terms, fewer families are living in poverty, and their median after-tax incomes are higher, according to a Vancouver Sun report in October, and this despite the increasing income inequality that has been observed.
These observations are seconded by Statistics Canada research showing that, from the mid-1990s to the mid-2000s, after-tax incomes and transfers increased in all income brackets and that, in fact, low-income families are not nearly as common in Canada as they once were. Of course, this does not mean that we should not consider income inequality.
The Minister of Finance recently spoke about his concerns in this regard. As reported in the Toronto Star, the minister said that income distribution is important and that the issue is that while a very small number of people have very high incomes, others do not have the same opportunities. This is not in keeping with the equal opportunity economy that our government is endeavouring to build, an economy that provides everyone with the opportunity to succeed no matter what their background.
We must not forget that this trend began well before the current government of Canada was brought to power by Canadians.
Therefore, it is one of many challenges that will be handled better by our government than by the opposition parties, as Canadians clearly realize. That is why they gave our government a majority. Canadians can rest assured that we have implemented a number of effective measures to address this challenge, including the pooled registered pension plan, or PRPP.
Some of the comments made by opposition members in this debate would have us believe that the solution to the problem of income disparity is for Canadian governments to simply take money from some people and give it to others, thus magically solving the problem.
The reality is that this approach would impoverish everyone. Our government knows that this is not how a country creates and distributes wealth in the real world.
Scuttling the entire ship will not encourage retirement savings, increase the standard of living or bridge the income gap. The real way to achieve these objectives is to take advantage of the power of our job creators, so that they can invest in higher wages, training, equipment and technology that allows them to do more, be more competitive globally and share their success with the country, which will benefit all Canadians.
With the next phase of Canada's economic action plan—a low-tax plan for jobs and growth—we are taking significant actions to create these conditions. These actions include reducing the tax burden for Canadians, thereby providing support to families and individuals, and encouraging businesses to make the types of productivity-enhancing investments that result in sustained economic growth.
As a result of broad-based federal and provincial business tax changes, Canada now has an overall tax rate on new business investment that is substantially lower than any other G7 country and is below the average of the member countries of the OECD. This tax advantage is aggressively positioning Canada for long-term success.
Forbes magazine recently ranked Canada number one in its annual look at the best countries for business. Globally, more and more people are putting their money to work on this understanding and investing in Canada as the place to be in the future. With the strong mandate we received from Canadians in the last election and with the next phase of Canada's economic action plan becoming a reality, these investments are going to pay off not just for investors, but for all Canadians. When Canada's entrepreneurs and job creators succeed, all Canadians succeed.
With the implementation of the PRPP framework, Canadians saving for retirement will be in the best possible position to invest in this dynamic approach to creating wealth and to support and benefit from it. As we have heard, PRPPs represent an innovative, low-cost, privately administered and accessible pension vehicle to help Canadians meet their retirement savings objectives. These plans are especially important to small and medium-sized businesses because they will allow such business owners and their employees to access a comprehensive, low cost, privately administered pension plan for the very first time.
Professional administrators will be subject to a fiduciary standard of care to ensure that funds are invested in the best interests of plan members. By pooling pension savings, Canadians will have greater purchasing power. The lower costs resulting from pooled purchasing will allow members to devote more of their income to retirement savings. These plans will be straightforward in order to simplify membership and management.
PRPPs will have to be harmonized across the provinces, which will further reduce administrative costs. These design features will eliminate many of the barriers that used to prevent some employers from offering retirement plans to their employees. Our government believes that this will encourage many small businesses to offer PRPPs. This is quite significant when we consider—and this is rather astonishing—that just over 60% of Canadians do not have a retirement plan provided by their employer. What is more, some Canadians might not be capitalizing on the all the saving possibilities currently available to them through individual products such as RRSPs and they might not be saving for retirement on a regular basis.
In cases where employers offer PRPPs, we encourage automatic enrollment for employees. Automatic enrollment will encourage regular savings in PRPPs. Employees who do not opt out will be automatically enrolled.
On another note, in December 2011, Parliament passed the Keeping Canada’s Economy and Jobs Growing Act, which implemented other important aspects of the next phase of Canada's economic action plan to help our economy flourish.
One of the most important measures in the act reflects the idea that jobs are the best income support program.
To protect jobs and support growth, the act grants small businesses a hiring tax credit of up to $1,000 to offset the increase in their employment insurance premiums in 2011 relative to their 2010 premiums. Some 525,000 businesses, and even more Canadian workers, will be able to benefit from this temporary measure.
I want to emphasize that this credit is in addition to our recent initiatives to limit employment insurance premium increases and to protect jobs.
Because we believe that employment is the best social security program, we introduced the working income tax benefit in 2007 and enhanced in it 2009 to encourage low-income Canadians to find and keep jobs.
As my government colleagues have pointed out, the WITB has provided over $1.1 billion per year to working low-income Canadians. Together with other tax cuts introduced by the government, the WITB has had an extremely positive impact in terms of encouraging people to find work and on the financial situation of many low-income Canadians.
Our government recognizes that it is important not only to create and protect good jobs to shrink the income gap, but also to enable people with jobs to keep more of their hard-earned money.
This is especially important for low-income Canadians who spend a greater proportion of their income to meet their families' basic needs: food, housing and clothing.
That is why our government reduced the tax burden for individuals, families and businesses by an estimated $220 billion in 2008-09 and for the following five years.
Individuals and families in all tax brackets are benefiting from tax cuts, with those in lower income brackets benefiting from proportionally bigger tax cuts.
For the 2011 tax year, one-third of the individual income tax cuts introduced by our government has benefited Canadians whose income was lower than $41,544, even though they pay only about 13% tax.
Cutting the GST from 7% to 5% gave all Canadians a break, including those who do not earn enough to pay income tax.
The GST credit, which was not reduced even though the GST was cut by 2%, returns more than $1.1 billion per year to low- and modest-income Canadians.
In addition, all taxpayers benefit from personal income tax reductions, such as the reduction from 16% to 15% for the lowest tax bracket, and the increase in the basic personal amount that Canadians can earn, which is not subject to federal income tax.
The Canada employment credit is another important measure that truly helps workers make ends meet. A credit of up to $1,065 is available for the 2011 taxation year to help cover work-related expenses, such as buying a personal computer, uniforms and supplies.
Measures implemented by our government since coming to power ensure that low-income Canadians now pay considerably less tax and receive greater benefits. A single parent with only one child who earns $37,000 will pay $1,125 less in personal income tax in 2011. In addition, as a result of changes made to the national child benefit supplement in budget 2009, this parent will also receive additional benefits of up to $241.
As a result of initiatives taken by our government since 2006, more than one million low-income Canadians no longer have to pay taxes.
But that is not all. Our government knows that employment is the best social safety net, and we have implemented measures to create jobs and to allow the incumbents to keep more of their hard-earned income.
Nevertheless, we realize that, for various reasons, some people are unable to take advantage of these measures. We therefore took action in order to remedy this situation.
The Canada social transfer and the Canada health transfer allow the Government of Canada to provide significant financial assistance to the provinces and territories in order to help them provide important programs and services to low-income Canadians.
These transfers support health care services, post-secondary education, social assistance and social services, as well as programs for our children.
In 2011-12, the provinces and territories will receive $11.5 billion in cash under the Canada social transfer and $27 billion under the Canada health transfer. These amounts will increase by 3% and 6% respectively over the next few years.
In budget 2009, the government invested $2.1 billion in the construction and renovation of social housing across Canada, including housing units for low-income seniors, people with disabilities and first nations people living on reserve.
In the latest budget, the government also announced a new guaranteed income supplement top-up benefit for Canada's most vulnerable seniors.
Since July 2011, seniors with little or no income other than the old age security pension and the guaranteed income supplement have been able to receive additional benefits of up to $600 for single seniors and up to $840 for couples per year. This measure will improve the financial security and well-being of more than 680,000 Canadian seniors.
Together, old age security and the guaranteed income supplement constitute Canada's largest federal social program, through which over $36 billion in benefits are paid to about 5 million Canadian seniors.
Low-income seniors who receive the guaranteed income supplement and who have a job will now be able to keep more of their earnings.
In budget 2008, the government increased to $3,500 the amount that can be earned before the guaranteed income supplement is reduced, so that GIS recipients will be able to keep more of their hard-earned money.
Thanks to our government's efforts to create jobs, to allow workers to keep more of their earnings and to help those who need it most, Canada has one of the lowest poverty rates among seniors out of the 33 OECD member countries. Our rate is lower than that of Australia at 27%, the United States at 24% and the United Kingdom at 10%.
Once fully implemented, PRPPs will play an important role in closing the income gap by promoting saving, while supporting a global investment process that will create wealth and move our economy forward.
Fortunately, when Bill C-25 passes, the provinces will have a model that is easy to apply to their respective frameworks, so that the system can be put to work for Canadians.
For all of these reasons, I encourage my colleagues to support the timely passing of Bill C-25 and our government's efforts to create a stronger, more prosperous and inclusive country for all Canadians.